I recently talked with Alok Aggarwal, the chairman and cofounder of Evalueserve, a pioneer in providing knowledge process outsourcing (KPO) services, a term the company coined in 2003. Evalueserve is at the opposite end of the spectrum from typical call center outsourcing companies because its focus is providing customized research conducted by highly educated professionals who have deep domain expertise. Its clients include investment banks, insurance companies, private equity firms, leading consulting firms, law firms, and intellectual property firms.

The company’s history and approach and Alok’s view of the transformation occurring in the outsourcing segment are fascinating – and they point to the continued and increasing disaggregation of activities many would have considered highly unlikely to be outsourced only a few years ago.

Part I: Inventing Knowledge Process Outsourcing

Tony Scott: Alok, could tell me how Evalueserve got started and how it has evolved to where it is today?

Alok Aggarwal: I used to work for IBM Research, at the Thomas J. Watson Research Center in New York about 40 miles north of New York City. I got a PhD in computer science and electrical engineering from Johns Hopkins University in 1982–84 and then joined these guys. I was with them for 16 years, taught at MIT for one year in 1987–88, and then went back [to IBM]. I became the director of strategy for IBM Research in 1996. One of the strategies that came out of that time was that we should open a lab in India. So I was given the charge to go and set up a lab in Delhi, in April of 1998. I was there for two and a half years, and we grew the lab to 35 PhDs and 35 researchers with master’s degrees during my tenure.

While we were doing this, we were writing patent applications. We sent the patent application work to a few Indian attorneys, and we very quickly realized that at that time the Indian patent lawyers did not have to be technically trained in engineering of science, so we ended up sending the patent application work to U.S. attorneys. But the bill we would receive from them for each patent application was about $11,000. I wanted to scream out loud whenever we received those bills, because that was what we were paying good researchers with master’s degrees for the whole year for their compensation.

Tony: That would definitely be hard to swallow!

Alok: So I was planning on quitting and starting a company that would do patent application services, intellectual property services, logistic services, and data analytic services, because those were the things I was already involved in. Fortunately, I met Marc Vollenweider, who had joined McKinsey & Company in Switzerland and had moved to McKinsey in India in January 1999. McKinsey had started a back-end research center called the McKinsey Knowledge Center in 1998. The person who had started it had moved on, so Marc was given the charge to oversee the operations. Marc and I met because our kids were going to the American Embassy School; we literally met because of a birthday party for the kids. We started talking, and it turned out that he was thinking about starting a company to do market research, business research, research for investment banks, and so on.

This was April 2000, just around the time when the NASDAQ had dropped like crazy. We decided that the best thing would be to do research and analytics as a company. The whole area of research and analytics was very large, so we started the company we called Evalueserve, for “evaluation services.”

Our entire view was that one moves from data to information and from information to knowledge, and finally, from there you can gain wisdom. Up to the level of knowledge, [what you gain] you can transfer from one human to another, but in our view, wisdom is best practices, and that may not be easily transferable. We are in the game of collecting and cleansing data for clients – data about sales, marketing campaigns, and so on. We cleanse the data and then run it through analysis software and services, and finally we convert it into nuggets that become knowledge. So that’s what we provide – knowledge services.

We started in December 2000. Everyone else in India was starting call centers and business process outsourcing (BPO) companies. The other person who joined us was Ashish Gupta, who had also been with McKinsey. In 2001 and 2002, Ashish was being asked repeatedly by various newspapers what we did. When we started telling them “research analytics,” they said, “Oh, you are another BPO company.” So we had to differentiate ourselves. Because we were looking at people with knowledge expertise, that’s how the name KPO – knowledge process outsourcing – came about. We wrote the first article on knowledge process outsourcing and pointed out that it is a $17 billion market.

Tony: So you think it’s a $17 billion market currently?

Alok: In the long run. At that time we had thought that it would be $17 billion by 2011. Of course, the past two or three years haven’t been that great for the world economy, so we are revising our projection this year. But once this market settles down, people will begin to take note again. I now think that knowledge process outsourcing will be a $17 billion worldwide market by 2015 or so.

Comments

Clearly, one of the smartest moves EVS has made is establish a delivery center in Chile – which has not just provided important global diversification- it has enabled the company to get at the front end of a major shift toward relying more on nearby “nearshore” talent.